In this short series of articles I will look to explain what you need to do before you buy any trading system and avoid the black hole of trading. This series will cover a step by step approach to using the markets to achieve your goals by highlighting 13 key areas that traders must address.

8. You’re not trading a system

Now we get into the meat, and I can guarantee you that most readers will scoff at all the points above, and only look to these points and beyond. Trading is a process. Many novice traders will find a system and paper trade it with a fair bit of success, but once they trade live, it all falls apart. The reason is simple; they stop trading a process and start thinking only about the money.

Even the great Warren Buffet trades a process. He meticulously analyzes his potential investments through many of his fundamental analytical tools, but he will never break any of his rules. He’ll even go to the extent of waiting many years for an investment to satisfy all his rules before investing in it.

A system needs to be created in such a way that you could employ someone else to trade it on your behalf. A system means finding reasons to get into a trade or investment, and reasons to get out, and doing this over and over again until you reach your goals, be it daily, weekly, yearly or whatever.

Becoming a successful trader does not happen when you hop from one system to another and from one market to another. All this does is create confusion in your mind because your mind needs routine. In fact, the hopping will in itself become a routine, and eventually you’ll find it hard to stop doing.

9. You’re trading someone else’s system

This is where the biggest problems I find exist in the trading world; trading somebody else’s system.

As mentioned in point 5, when someone creates a profitable trading system, it is doing three things; it is firstly getting this person in and out of the markets as often as it needs to, it is achieving this persons particular goals, over a certain time period, and it is operating in sync and in harmony with this person, their trading business and it’s mechanics.

Mechanics being the traders’ resources, emotional make-up, and strengths and so on; basically, the system works because it is was built to ensure the trading business achieved its goals.

Now I’m not saying you can’t successfully trade someone else’s system, but what I am saying is that if your trading business’s mechanics are in stark contrast to those of the system’s owner you are going to struggle.

Once again, knowing what you can bring to the markets helps you to decide which of the many thousands of systems out there is going to best match you and your goals. However even then after finding a system to match or creating your own, the biggest mistake made by most is they don’t back-test which brings us to our next point.

10. You haven’t done any back-testing

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